Australia's Trade Minister Don Farrell has predicted that Europe is poised to overtake the United States as the nation's second-largest trading partner following the signing of a historic free trade agreement in Canberra.
The deal, inked by Prime Minister Anthony Albanese and EU Commission President Ursula von der Leyen after eight years of arduous negotiations, eliminates 99% of tariffs—an estimated €1 billion in annual duties—and is expected to deliver an immediate $10 billion windfall to the Australian economy.
Beyond traditional commerce, the "remarkable" agreement establishes a strategic security partnership, allowing Australia to co-produce weaponry under the EU’s €150 billion SAFE rearmament program.
It also secures a critical minerals pipeline, offering Europe a tariff-free alternative to Chinese monopolies.
Australia may also join the Horizon Europe research program, potentially granting thousands of local scientists visa access to collaborate on dual-use technologies and quantum computing.
However, the "fair deal" comes with domestic friction. Australian meat producers expressed disappointment over restrictive quotas, with beef exports capped at 30,600 tonnes—far below the industry's 50,000-tonne target.
To secure the pact, the federal government also agreed to forgo $200 million by easing the luxury car tax, a strategic move to assist European EV manufacturers.